Aereo: The TV innovation that may be too good to last

A startup making exactly the right move with TV is driving FOX and CBS crazy.

Aereo, a service that streams over-the-air channels to its subscribers, has now spent more than a year serving residents of New York City. The service officially expands to Boston tomorrow and is coming to many more cities over the next few months, including Atlanta and Washington, DC. Aereo seems like a net-add for consumers, and the opposition has, so far, failed to mount a defense that sticks.

But the simple idea behind Aereo is so brilliant and precariously positioned that it seems like we need to simultaneously enjoy it as hard as we can and not at all. We have to appreciate it for exactly what it is, when it is, and expect nothing more. It seems so good that it cannot last. And tragically, there are more than a few reasons why it may not.

A little about how Aereo works: as a resident of the United States, you have access to a handful of TV channels broadcast over the air that you can watch for free with an antenna (or, two antennas, but we’ll get to that). A subscription to Aereo gets you, literally, your very own tiny antenna offsite in Aereo’s warehouse. The company streams this to you and attaches it to a DVR service, allowing you both live- and time-shifted viewing experiences.

Like with most cable program guides, users can see what's going to be on up to a week in advance.

Aereo service is cheap, but it’s not free—not illegal-streaming free or watching-TV-episodes-four-weeks-late-on-a-network’s-website free. Still, the cost is low enough and it has enough value added, mainly in the form of the DVR, that I’m more than willing to pay for it.

In my time with the service, I’ve had a couple of “buffering” messages crop up, but nothing egregious. The Web interface can sometimes be a little stuttery, particularly on mobile devices when navigating the programming guide. But once I’m settled into watching something, the stream is high quality.

Some standard remote functions are available (pause, skip back, record), and it's possible to start watching a show in progress from the beginning. Per Aereo, the service starts recording a program as soon as you start watching it, which allows this functionality. Pressing “record” while it’s in progress will save the recording.

The "feed" provides some recommendations on shows of interest.

Aereo provides a “feed” which recommends a handful of shows upcoming that day or night. Since there are only a handful of shows to choose from, recommendations tend to be fairly rote: a performance at Lincoln Center, a late-night talk show. You can also search the programming guide to find upcoming shows rather than browsing by the day or hour.

Subscribing to the plan with two antennas affords you the ability to record one show while watching another or record two shows at once. When a show is selected to record, Aereo asks you if you want to record just once, all episodes, or only new episodes. Aereo then presents a handful of settings you can tweak, including toggles for start- and stop-recording times.

You can set the show’s recording priority in a numbered list, though this is done in the context of all shows set to record with no regard for whether they ever conflict. If you have a lot going on your DVR, this list could be a little hard to wrangle.

If you do schedule a third, conflicting show, Aereo will ask which of the two previously scheduled recordings it should cancel, if any. You can cancel the recording or tell Aereo to “schedule it anyway.” If you do this, Aereo will plop an alert over your browsing experience. Presumably this is so you can schedule something in a hurry so you don’t forget and then resolve the conflict later when you have time to think about whether you’d rather miss The Voice or Extreme Weight Loss.

Aereo's DVR service comes in 20-hour and 60-hour denominations.

Unlike actual live TV, a channel won’t play indefinitely. The playback will stop when any show ends, and you’ll have to press play again on the stream or select another show to restart it. So if you’re a TV-as-background-noise kind of person, the experience will not be quite as seamless. And you do still get commercials. Sadly.

The service is on par in price with a Netflix subscription: $8 per month plus tax for one antenna and 20 hours of DVR storage or $12 per month for two antennas and 60 hours of storage.

“I’m not touching you… I’m not touching you…”

Aereo has been challenged in court over its delivery process, with broadcasters suing on the grounds that the service is “retransmission.” That would require Aereo to pay fees to the broadcasters (right now, Aereo pays them as much as you would for your own antenna, which is nothing). Another suit alleged Aereo streams count as “public performance” and infringe copyright, but that has already been put down. Aereo is embattled, but the service is proving a stronger case than broadcasters might have been expecting at the outset.

While the company is on the verge of expanding to many more markets, doubt has been cast on whether the model is sustainable—or more so, whether broadcasters will allow the parasitic relationship to continue. According to Politico, only 10 percent of TV viewers use antennas to access broadcast networks, while the rest access them via a cable package. If broadcasters were to pull up their stakes and go cable-only (which at least FOX and CBS have openly threatened to do), there would be little to lose on their end in terms of audience.

So to the point, the number of people using antenna broadcasts is shrinking. Even more to the point, as Politico states, the block of spectrum occupied by over-the-air broadcasts “would most likely be more valuable if converted to mobile broadband use.”

The FCC made it clear in September that it intends to convert some of the spectrum currently used by TV broadcasts in the 600MHz range to mobile-use in 2014. The auction will work by allowing broadcasters to submit 6MHz chunks of spectrum for bidding, which the FCC will turn around and repackage and sell to mobile operators.

With that opportunity close at hand, not much reason to hang around in the broadcast airspace, and freeloaders like Aereo closing in, it’s not hard to imagine some of the broadcasters declaring they’re out and going cable-only. While Aereo sounds like broadcasts' best motivation to keep going in terms of viewership growth, it gives the broadcasters no tangible reason to stay.

A beautiful thing that most cable providers lack: a search field that you can use an actual keyboard to type into.

Aereo may be trying to ride out the legal attacks against it and put itself in control before extending an olive branch to broadcasters to incentivize their relationship (Aereo did not respond to requests for comment). Time Warner stated that it may start its own Aereo-like service if Aereo can successfully defend itself. Broadcasters may be able to suffer Aereo gladly, but not Aereo plus a copycat from every cable provider, including Comcast or the Dish Network. The time for Aereo to both evade broadcasters and win them over is starting to run out.

A mass broadcaster exodus just to spite Aereo seems unlikely. But a nascent service is predicating its success on an ability to cannibalize a crotchety, aging one with no tithes paid. This is obviously a risky move. For all the cable-cutting people and Aereo’s improbable survival, the situation seems too good to be true. It might yet turn out to be.

It should also be noted that Aereo is still including the original advertising in what it shows. Since over-the-air broadcasts are paid for by advertising, and that advertising is included, what is being lost is the fees paid by cable companies. This is yet another place where technology is rendering cable carriers irrelevant, and that is going to affect other parts of the system as well. But in the long term, cable companies should be looking at turning themselves into online services. Aereo has just jumped in as a competitor to those not-yet-created online services and of course people are scared because they are seeing a future they haven't figured out how to participate in.

No more than you do by having an antenna in your house. That's what broadcast TV is for.

Quote:

... makes money off thei content, refuses to pay a retrans fee, or a cut of their ad sales, or share data.

All Aereo is doing is acting like a rented antenna that's not blocked by trees or hills or buildings, and renting you a DVR. Why would they need any broadcaster's permission or to make a monetary deal with them for that? They're not putting their own ads into the stream, they're not altering the content itself, they're not censoring shows they don't like, and they're not selling unlimited copies of the material.

Count me as one of those who does not understand why the broadcasters are so inflamed by this service. Broadcast TV (as opposed to cable) is funded purely on advertising revenues. Aereo does not airs the original ads along with the show. So, Aereo essentially increases the potential audience that can view the ads. Broadcasters can use this to negotiate higher advertising revenue.

You do lose targetted advertising, but instead of complaining about it, it would be a beautiful thing to see the broadcasters reach out to Aereo to address this issue, rather than throwing hissy fits in the courts.

Granted, I am not too familiar with revenue from cable company deals. I suppose broadcasters get revenue from cable companies in addition to ad revenue from putting their shows on cable.

It seems like a gray area where I am not sure who is selling what to whom. Cable companies want content to attract customers, broadcasters want an audience to sell ads to. Right now cable has to pay broadcasters, but is there a case that it should be the other way around?

Aero takes without permission, makes money off thei content, refuses to pay a retrans fee, or a cut of their ad sales, or share data.

When there are deals made instead of middle fingers given, nets are happy to play along.

Bullshit, read malor's post above. He's literally 100% accurate. Don't forget that the airwaves are a public good, and the broadcasters use them at our sufferance. If they don't want to play nice with the airwaves, they're free not to re-up the next time the lease is available. I'm sure we have better uses for that air time than The Voice or what-have-you anyway.

Do Aereo viewers not show up in Nielson numbers? That might explain why broadcasters have their panties in a twist. Otherwise I don't see what the problem is. That said, I also doubt this company will survive in the courts for long, not unless some miracle happens and it gets a favorable ruling from the Supreme Court.

I still remember how mp3.com got canned when its whole business model was "you upload all of your own CDs and then play them back." It was as legit as you could possibly get and the courts shot it down practically before it even opened. If it looks weird and it involves copyrighted material it's real easy to get the courts to rule against it.

From personal experience, I can tell you that the decision to stop broadcast has huge legal implications.

It's standard in many contracts for actors, writers, producers... everyone involved... to be paid a different rate for "broadcast episodes." I learned this the hard way when a show based on one my book series was moved at the last minute from NBC to the SciFi Channel. Instead of making a quarter milliion that year, I made exactly zero because my payment was specified by broadcast episode and there was nothing in the language on non-broadcast transmission (this is what happens when you let your book agent negotiate a TV contract).

17 posts | registered Jan 22, 2009

Casey Johnston
Casey Johnston is the former Culture Editor at Ars Technica, and now does the occasional freelance story. She graduated from Columbia University with a degree in Applied Physics. Twitter@caseyjohnston

It should also be noted that Aereo is still including the original advertising in what it shows. Since over-the-air broadcasts are paid for by advertising, and that advertising is included, what is being lost is the fees paid by cable companies. This is yet another place where technology is rendering cable carriers irrelevant, and that is going to affect other parts of the system as well. But in the long term, cable companies should be looking at turning themselves into online services. Aereo has just jumped in as a competitor to those not-yet-created online services and of course people are scared because they are seeing a future they haven't figured out how to participate in.

Sounds awesome. I've lived in the heart of downtown of some MAJOR cities, yet couldn't get a decent tv signal due to too much interference from all the surrounding structures. I tried several good powered antennas, but at best could only get like 2 channels. This would've been the perfect solution.

Haha...sounds like that water supply company in NY should start suing poland springs and such for selling water in a bottle. I say, we need a new form of entertainment other than watching the stupid screen

This is not a 'parasitic relationship', and you've been cowed by the copyright lobby if you really, seriously, think it is.

This is the original deal with television, that you can use an aerial to watch for free. This has been the deal for more than fifty years. All you have to do, to get basically the same service, is put a good antenna on your roof and hook up a DVR.

That's a bit expensive, and kind of a PITA, so you can rent an antenna, possibly with better reception than what you have at home, and rent a DVR. This is still the original deal; you can watch TV for free. You don't have to pay for television, that's the entire reason they're allowed to tie up all that delicious, useful spectrum. You're just renting better equipment to do it. And because Aereo can scale really well, the monthly payment is quite reasonable.

Don't buy the story from the copyright bullshitters. They are wrong about this. There is absolutely nothing illegitimate about what you're doing. Aereo will only rent you an antenna if you live in the service area anyway, so anything you can get for the monthly fee, you can get for free, 100% legally.

You're just paying for convenience. Nothing is being 'stolen'. You are not a pirate. You are just technically clueful enough to outsource your free TV reception.

"But a nascent service is predicating its success on an ability to cannibalize a crotchety, aging one with no tithes paid. This is obviously a risky move. For all the cable-cutting people and Aereo’s improbable survival, the situation seems too good to be true. It might yet turn out to be."

Nice graf. Also, the problem with a startup like this is is not only that incumbent cable powers may bring suit, but that incumbent internet powers might decide to do their own version and blow you out of the water, like Google is probably going to do to Spotify.

This is not a 'parasitic relationship', and you've been cowed by the copyright lobby if you really, seriously, think it is.

This is the original deal with television, that you can use an aerial to watch for free. This has been the deal for more than fifty years. All you have to do, to get basically the same service, is put a good antenna on your roof and hook up a DVR.

That's a bit expensive, and kind of a PITA, so you can rent an antenna, possibly with better reception than what you have at home, and rent a DVR. This is still the original deal; you can watch TV for free. You don't have to pay for television, that's the entire reason they're allowed to tie up all that delicious, useful spectrum. You're just renting better equipment to do it. And because Aereo can scale really well, the monthly payment is quite reasonable.

Don't buy the story from the copyright bullshitters. They are wrong about this. There is absolutely nothing illegitimate about what you're doing. Aereo will only rent you an antenna if you live in the service area anyway, so anything you can get for the monthly fee, you can get for free, 100% legally.

You're just paying for convenience. Nothing is being 'stolen'. You are not a pirate. You are just technically clueful enough to outsource your free TV reception.

I totally agree. More needs to be done for the sake of convenience, and consumers. When I hear CEO's verbally shit on consumers, I feel sick to my stomach,

I have the service for the Boston area and like it quite a bit. I live on the fringe, TV is good in the winter when there are no leaves on the trees, but forget it in the summer. Don't do too much OTA but the wife loves the news and has to have the weather when the storms are raging.

First of all, they aren't being paid for those ads, or those eyeballs.

Of course they are -- the cable companies are getting every dollar from the advertisers they would get anyway. And Aereo can easily tell anyone who asks how many people are watching shows, which is something they can't do if customers use their own aerials.

Any complaints about this is just the copyright lobby trying to renege on an extremely old - and extremely lucrative - deal for them.

I keep hearing that threat from the broadcasters; that they'll pull out and go Cable only in a moment's notice. However don't they have contractual obligations with their hundreds of affiliates that rebroadcast their content on local channels? How could they possibly pull out and go cable only, wouldn't they infringe on the contracts of every single regional affiliate?

It's a long shot; but we should all work on convincing ABC and NBC to join Fox and CBS in rage-quitting the broadcast market. (Give or take a few small holes TV broadcast currently has 54-88, 174-216, and 470-698 mhz.) If it works, instead of just the 600 mhz band we could free the 500 and upper 400 mhz bands as well. Maybe a bit of spectrum below that too depending on how much the various indie stations need, and if the rest is suitable for phone use. Some parts of the world already use 400 mhz for phones though, so at least down that far is still suitable for repurposing.

Count me as one of those who does not understand why the broadcasters are so inflamed by this service. Broadcast TV (as opposed to cable) is funded purely on advertising revenues. Aereo airs the original ads along with the show. So, Aereo essentially increases the potential audience that can view the ads. Broadcasters can use this to negotiate higher advertising revenue.

You do lose targetted advertising, but instead of complaining about it, it would be a beautiful thing to see the broadcasters reach out to Aereo to address this issue, rather than throwing hissy fits in the courts.

Granted, I am not too familiar with revenue from cable company deals. I suppose broadcasters get revenue from cable companies in addition to ad revenue from putting their shows on cable.

It seems like a gray area where I am not sure who is selling what to whom. Cable companies want content to attract customers, broadcasters want an audience to sell ads to. Right now cable has to pay broadcasters, but is there a case that it should be the other way around?

Aereo will only rent you an antenna if you live in the service area anyway, so anything you can get for the monthly fee, you can get for free, 100% legally.

Consider the 2nd Circuit's ruling on the matter; that doesn't impose such a limit. There is nothing stopping Aereo from rebroadcasting New York stations to Mumbai. On another note, the broadcasters have never, to my knowledge, threatened legal action against the subscribers.

It's not a one to one thing, like we got 11 more viewers and thus make $.75 more. The smallest chunk that Neilsen can measure is 25,000 viewers, now assuming that Aero gets that many subscribers total, they are unwilling to share even this data w/ local affiliates or the networks, and even if they did, it would not perceptibly move the bottom line.

Why? If you use the service now and pay for it now, then you aren't losing any money, you're using what is available at the moment. Whether or not it's available tomorrow is irrelevant to me using it now.

[snip]First off, in NYC, both TWC and cable vision provide all of the Over the Air channels as unencrypted analogue signals - simply screw the coax into the antenna slot of your TV, and you will get high quality, flawless OTA broadcasts, for free (or rather with a cable TV subscription as the signal to your jacks is supposed to be blocked with a filter, and removing the filter even to get the unencrypted OTA signal is still cable piracy), without any antenna. Wanna watch on a laptop? Get a $29 USB tuner, which comes w/ free DVR software, or a Slingbox.[/snip]

This is not a 'parasitic relationship', and you've been cowed by the copyright lobby if you really, seriously, think it is.

This is the original deal with television, that you can use an aerial to watch for free. This has been the deal for more than fifty years. All you have to do, to get basically the same service, is put a good antenna on your roof and hook up a DVR.

That's a bit expensive, and kind of a PITA, so you can rent an antenna, possibly with better reception than what you have at home, and rent a DVR. This is still the original deal; you can watch TV for free. You don't have to pay for television, that's the entire reason they're allowed to tie up all that delicious, useful spectrum. You're just renting better equipment to do it. And because Aereo can scale really well, the monthly payment is quite reasonable.

Don't buy the story from the copyright bullshitters. They are wrong about this. There is absolutely nothing illegitimate about what you're doing. Aereo will only rent you an antenna if you live in the service area anyway, so anything you can get for the monthly fee, you can get for free, 100% legally.

You're just paying for convenience. Nothing is being 'stolen'. You are not a pirate. You are just technically clueful enough to outsource your free TV reception.

I totally agree. More needs to be done for the sake of convenience, and consumers. When I hear CEO's verbally shit on consumers, I feel sick to my stomach,

What CEO are you referring to?And you realize that with TV, like Facebook, you and your attention are the product, not the customers.Basically your position is that your should be shoveled free, ultra-high quality entertainment 24/7 over any and every network, regardless of traffic, and that these companies should operate at a loss to deliver that?

[snip]First off, in NYC, both TWC and cable vision provide all of the Over the Air channels as unencrypted analogue signals - simply screw the coax into the antenna slot of your TV, and you will get high quality, flawless OTA broadcasts, for free (or rather with a cable TV subscription as the signal to your jacks is supposed to be blocked with a filter, and removing the filter even to get the unencrypted OTA signal is still cable piracy), without any antenna. Wanna watch on a laptop? Get a $29 USB tuner, which comes w/ free DVR software, or a Slingbox.[/snip]

Not on TWC in NYC. This has worked in every apt I have even been in NYC.

No more than you do by having an antenna in your house. That's what broadcast TV is for.

Quote:

... makes money off thei content, refuses to pay a retrans fee, or a cut of their ad sales, or share data.

All Aereo is doing is acting like a rented antenna that's not blocked by trees or hills or buildings, and renting you a DVR. Why would they need any broadcaster's permission or to make a monetary deal with them for that? They're not putting their own ads into the stream, they're not altering the content itself, they're not censoring shows they don't like, and they're not selling unlimited copies of the material.

Count me as one of those who does not understand why the broadcasters are so inflamed by this service. Broadcast TV (as opposed to cable) is funded purely on advertising revenues. Aereo does not airs the original ads along with the show. So, Aereo essentially increases the potential audience that can view the ads. Broadcasters can use this to negotiate higher advertising revenue.

You do lose targetted advertising, but instead of complaining about it, it would be a beautiful thing to see the broadcasters reach out to Aereo to address this issue, rather than throwing hissy fits in the courts.

Granted, I am not too familiar with revenue from cable company deals. I suppose broadcasters get revenue from cable companies in addition to ad revenue from putting their shows on cable.

It seems like a gray area where I am not sure who is selling what to whom. Cable companies want content to attract customers, broadcasters want an audience to sell ads to. Right now cable has to pay broadcasters, but is there a case that it should be the other way around?

Aero takes without permission, makes money off thei content, refuses to pay a retrans fee, or a cut of their ad sales, or share data.

When there are deals made instead of middle fingers given, nets are happy to play along.

Bullshit, read malor's post above. He's literally 100% accurate. Don't forget that the airwaves are a public good, and the broadcasters use them at our sufferance. If they don't want to play nice with the airwaves, they're free not to re-up the next time the lease is available. I'm sure we have better uses for that air time than The Voice or what-have-you anyway.

Count me as one of those who does not understand why the broadcasters are so inflamed by this service. Broadcast TV (as opposed to cable) is funded purely on advertising revenues. Aereo does not airs the original ads along with the show. So, Aereo essentially increases the potential audience that can view the ads. Broadcasters can use this to negotiate higher advertising revenue.

You do lose targetted advertising, but instead of complaining about it, it would be a beautiful thing to see the broadcasters reach out to Aereo to address this issue, rather than throwing hissy fits in the courts.

Granted, I am not too familiar with revenue from cable company deals. I suppose broadcasters get revenue from cable companies in addition to ad revenue from putting their shows on cable.

It seems like a gray area where I am not sure who is selling what to whom. Cable companies want content to attract customers, broadcasters want an audience to sell ads to. Right now cable has to pay broadcasters, but is there a case that it should be the other way around?

Aero takes without permission, makes money off thei content, refuses to pay a retrans fee, or a cut of their ad sales, or share data.

When there are deals made instead of middle fingers given, nets are happy to play along.

Do Aereo viewers not show up in Nielson numbers? That might explain why broadcasters have their panties in a twist. Otherwise I don't see what the problem is. That said, I also doubt this company will survive in the courts for long, not unless some miracle happens and it gets a favorable ruling from the Supreme Court.

I still remember how mp3.com got canned when its whole business model was "you upload all of your own CDs and then play them back." It was as legit as you could possibly get and the courts shot it down practically before it even opened. If it looks weird and it involves copyrighted material it's real easy to get the courts to rule against it.

And you realize that with TV, like Facebook, you and your attention are the product, not the customers.Basically your position is that your should be shoveled free, ultra-high quality entertainment 24/7 over any and every network, regardless of traffic, and that these companies should operate at a loss to deliver that?

Remember, the advertisers are the customer, the viewer are not.

...and the aereo retransmits those advertisements with the content. It is a DVR with a longer cord. The advertisers have little to complain about; the casualty here is not the profit model but the knee-jerk control-freakishness of the television network

I would expect they'd make a ton more via re-transmission fees that by leveraging more out of Ad companies for an additional ~1000* viewers (which they wouldn't be able to prove without numbers from Aereo anyway).